Although earnings season is in full swing, the broader markets are strangely quiet. The VIX is below 14, and the S&P futures are flat. Among the stocks trending this morning are Caterpillar Inc. (NYSE:CAT), Carnival Corp (NYSE:CCL), Honeywell International Inc. (NYSE:HON), AutoNation, Inc. (NYSE:AN), and SunTrust Banks, Inc. (NYSE:STI). Let’s take a closer look at why each stock is in the spotlight and see how the smart money thinks of each of them.
While there are many metrics that investors can assess in the investment process, the hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor to beat the S&P 500 by around 95 basis points per month (see the details here).
Caterpillar Misses on the Bottom Line
Caterpillar Inc. (NYSE:CAT) reported a mixed first quarter, with earnings of $0.67 per share on revenue of $9.46 billion, versus estimates of $0.68 in EPS and revenue of $9.39 billion. Due to lower commodity prices, the company’s EPS dropped to $0.67 from $2.07 in the first quarter of 2015. Guidance is light, with management expecting 2016 sales of $40-$42 billion versus the previous guidance of $40-$44 billion and 2016 profit of $3.70 per share versus the previous $4 per share. The primary reason for the lower EPS is higher restructuring costs. Caterpillar Inc. (NYSE:CAT) CEO Doug Oberhelman said:
While first-quarter results were about as we expected, sales and profit were well below the first quarter of 2015. Sales declined across the company with substantial reductions in construction, oil and gas, mining and rail. While many of the industries we serve are challenged, we remain focused on what we can control: the quality of our products, our market position, safety in our facilities and continued restructuring and cost reduction. In fact, our period costs and variable manufacturing costs in the quarter were nearly $500 million lower than the first quarter of 2015
Joel Greenblatt’s Gotham Asset Management was among 31 funds that we track that owned shares of the company at the end of December.
Carnival to Begin Miami-Cuba Trips in More Than Half a Century
Carnival Corp (NYSE:CCL) is buzzing today after the company issued a press release confirming that its Fathom brand will sail every other week from Miami to Cuba beginning on May 1. The maiden voyage will be the first such trip in more than half a century due to previous U.S. and Cuban tensions. As a bonus, Cuba has also allowed Cuban-born passengers to visit the country. The number of smart money investors from our database with holdings in Carnival Corp (NYSE:CCL) dropped by five to 48 at the end of December.
On the next page, we examine Honeywell International, AutoNation, and SunTrust Banks.